FORBEARANCE AGREEMENT
This Forbearance Agreement (the “
Agreement ”), dated as of February 26, 2009, by and
among Morris Publishing Group, LLC (“ MPG ”) and
Morris Publishing Finance Co. (“ MPF ”) (MPG and
MPF, each an “ Issuer ” and together, the
“ Issuers ”), each of the undersigned entities
listed as guarantors (collectively, the “ Guarantors
”), and each of the undersigned holders of the Notes (as
defined below) and/or, to the extent not signing as a holder, their
investment advisors or managers identified on Annex A hereto
(collectively, the “ Holders ”). Each of MPG,
MPF and each of the Guarantors are referred to individually as a
“ Morris Company ”, and collectively as the
“ Morris Companies .”
W
I T N E S S E T H:
WHEREAS, the Issuers, the Guarantors
and Wachovia Bank, N.A., as Trustee (including any successor
trustee(s), the “ Indenture Trustee ”) have
entered into that certain Indenture (as amended, modified or
supplemented prior to the date hereof, and together with all
exhibits thereto, the “ Indenture ”), dated as
of August 7, 2003, in respect of the Issuers’ $278,478,000
principal amount of 7% Senior Subordinated Notes due 2013 (the
“ Notes ”);
WHEREAS, the Holders collectively hold
more than $226,000,000 in aggregate principal amount of the Notes,
representing more than 80% of the aggregate principal amount of the
Notes outstanding, and certain of those Holders have formed an
informal group (the “ Ad Hoc Group ”), for the
purposes of entering into discussions with the legal and financial
advisors to the Morris Companies concerning a potential
restructuring of the Morris Companies and have retained Stroock
& Stroock & Lavan LLP (“ Stroock ”) as
restructuring counsel and FTI Consulting, Inc. as financial advisor
(“ FTI ”, and together with Stroock, the “
Advisors ”) in connection with such discussions;
WHEREAS, on February 2, 2009, the
Issuers failed to make the interest payment due on the Notes
pursuant to the Indenture and the Notes (the “ Missed
Payment ”), and such failure constitutes a Default under
the Indenture (the “ Existing Default ”);
WHEREAS, the Issuers acknowledge and
agree that the Existing Default has occurred and is continuing as
of the date hereof, and has not yet been cured or waived;
WHEREAS, the Issuers’ failure to
make the Missed Payment on or before March 4, 2009, together with
interest on such defaulted interest pursuant to Sections 2.12 and
4.1 of the Indenture, shall (i) constitute an “Event of
Default” under Section 6.1 of the Indenture (the “
Payment Default”) and (ii) permit the holders of at least
twenty-five (25) percent of the outstanding principal amount of the
Notes to accelerate the maturity of the Notes (the
“Acceleration”), declare all amounts under the Notes
and the Indenture immediately due and payable, and exercise all
other rights and remedies available under the Indenture;
WHEREAS, the Issuers and the Guarantors
have requested that the Holders temporarily forbear from exercising
their rights and remedies under the Indenture, and from directing
the Indenture Trustee to exercise any such rights and remedies on
the Holders’ behalf resulting from the Existing Default and
the Payment Default; and
WHEREAS, the Holders are willing to
grant the Issuers’ and Guarantors’ request for
forbearance described in the preceding paragraph on the terms and
subject to the conditions contained herein.
NOW, THEREFORE, in consideration of the
mutual covenants set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
SECTION 1. Defined Terms. Each
capitalized term used herein and not otherwise defined herein shall
have the meaning attributed to such term in the Indenture. Each of
the following capitalized terms shall have the meaning set forth
below:
“ Credit Agreement ” means
that certain Credit Agreement, dated as of December 14, 2005 (and
as amended, modified or supplemented prior to the date hereof), by
and among MPG as Borrower, Morris Communications Company, LLC
(“ MCC ”), the Lenders party thereto, J.P.
Morgan Securities Inc. as Sole Lead Arranger and Sole Bookrunner,
The Bank of New York, Keybank, N.A., Suntrust Bank and Wachovia
Bank, N.A. as Co-Documentation Agents and J.P. Morgan Chase Bank,
N.A. as Administrative Agent (the “ Administrative
Agent ”).
“ Forbearance Effective Date
” means the date on which each of the conditions to the
effectiveness of this Agreement specified in Section 3 of this
Agreement is satisfied.
“ Forbearance Period ”
means the period beginning on the Forbearance Effective Date and
ending on the Forbearance Termination Date.
“ Forbearance Termination Date
” means the earliest date of occurrence of a Forbearance
Termination Event.
“ Forbearance Termination Event
” means any of the following events:
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the acceleration of the maturity of any
obligations under the Credit Agreement;
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the termination of Waiver No. 3, dated as of
February 26, 2009, by and among MCC, MPG and the Administrative
Agent (the “ Waiver No. 3 ”), relating to the
Credit Agreement and/or the Morris Companies’ and MCC’s
existing senior secured term and revolving credit facilities (the
“ Senior Secured Credit Facilities ”);
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any amendment, waiver, supplementation or
modification of Waiver No. 3 without the consent of the Ad Hoc
Group or any other Holder party to this Agreement;
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the occurrence of a Default or Event of
Default under the Indenture other than the Existing Default or the
Payment Default;
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the filing of a bankruptcy case, including,
without limitation, a chapter 11 bankruptcy proceeding, by any of
the Morris Companies or any subsidiary thereof;
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the breach of, or failure of the Morris
Companies to comply with, Section 6(b) of this Agreement, without
the need for prior written notice;
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the failure of any representation or warranty
made by the Morris Companies in this Agreement to be true and
correct in all material respects as of the date when made;
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the failure by the Morris Companies to comply
with any term, condition, covenant or agreement contained in this
Agreement; or
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(i)
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5:00 p.m. EDT on April 6, 2009.
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“ Remedial Action ” means
any action to enforce any of the rights and remedies available to
the Holders or the Indenture Trustee under the Indenture, the Notes
and any amendments or supplements to the foregoing, including,
without limitation, any action to accelerate, or join in any
request for acceleration of, the Notes.
SECTION 2. Forbearance. Subject to, and
effective as of, the Forbearance Effective Date:
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Each Holder hereby agrees that during the
Forbearance Period it will not (x) take any Remedial Action with
respect to the Notes in connection with the Existing Default or the
Payment Default or (y) sell, pledge, hypothecate or otherwise
transfer any Notes, except to (A) a purchaser or other entity who
agrees in writing with the transferor (with a copy to and for the
benefit of the Morris Companies) prior to such transfer to be bound
by all of the terms of this Agreement with respect to the relevant
Notes being transferred to such purchaser, (B) a party who is
already a signatory hereto, (C) an entity that, as of the date
hereof, was, and as of the date of transfer, continues to be an
entity that controls, is controlled by or is under common control
with the transferor; provided , however , that in the
case of either (B) or (C) above, such party or entity, as the case
may be, shall automatically and without further action be subject
to the terms of this Agreement and deemed a party hereto. This
Agreement shall in no way be construed to preclude any Holder from
acquiring additional Notes, to the extent permitted by applicable
law.
However, such Holder shall, automatically and
without further action, be subject to this Agreement with respect
to any Notes so acquired. The foregoing limited forbearance shall
not be construed to impair the ability of the Holders or the
Indenture Trustee to exercise any rights or remedies under the
Indenture or take any Remedial Action at any time after the
Forbearance Period (regardless of whether or not such Remedial
Action relates to actions taken or payments received during the
Forbearance Period), or during the Forbearance Period for Defaults
or Events of Default other than the Existing Default and the
Payment Default, and nothing herein shall restrict, impair or
otherwise affect the exercise of the Holders’ rights under
this Agreement.
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The Holders’ forbearance, as provided
herein, shall immediately cease on the Forbearance Termination Date
without requirement for any notice, demand or presentment of any
kind, and the Issuers and Guarantors at such time shall be
obligated to comply with and perform all terms, conditions and
provisions of the Indenture and the Notes without giving effect to
the forbearance set forth herein, and the Indenture Trustee and the
Holders may at any time thereafter proceed to exercise any and all
of their rights and remedies, including without limitation, their
rights and remedies in connection with the Existing Default, the
Payment Default (if applicable) and any other Defaults or Events of
Default under the Indenture or rights under this Agreement.
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The Holders’ forbearance is further
expressly subject to and conditioned upon the Morris
Companies’ strict compliance with each and every material
term and provision of this Agreement, and, except with respect to
the Existing Default and the Payment Default, the Morris
Companies’ strict compliance with each and every term and
provision of the Indenture and Notes, except as such terms and
provisions are modified by this Agreement.
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Each of the Holders acknowledges that it will
request that the Indenture Trustee not take any Remedial Action,
including without limitation, any action to accelerate the Notes
during the Forbearance Period. In the event that the Indenture
Trustee takes any action to declare all of the Notes immediately
due and payable pursuant to Section 6.2 of the Indenture during the
Forbearance Period solely due to the Existing Default or the
Payment Default, the Holders agree, pursuant to Section 6.2 of the
Indenture, to promptly rescind and cancel such acceleration;
provided , however , that if the Holders rescind and
cancel such acceleration by the Indenture Trustee, each Holder
shall defer its right to receive any cur
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